Banks Go On-Line to Keep High-Tech Clients

Banks have begun offering on-line trading services, but in general they are not looking to hook the self-directed retail investors who frequent the Web sites of firms like E-Trade Group or Charles Schwab & Co.

What they do want is to ensure that they do not lose customers who want on-line access to those nonbanks.

"It's not our primary business. It's not the bank's primary business focus," said Larry C. Kreul, managing director with Comerica Securities, a division of Comerica Inc. of Detroit.

Comerica started its on-line brokerage in July, joining banks like San Francisco-based Unionbancal Corp. and the former NationsBank Corp., now BankAmerica Corp. of Charlotte, N.C., which also went live last year.

"Initially it was defensive," Mr. Kreul conceded. But Comerica has managed to lure not just existing brokerage customers who might have gone elsewhere for on-line services, but also some customers from the bank, he said.

"We're seeing more and more activity," he said. He declined to provide figures.

Huntington Investment Co., the brokerage unit of Huntington Bancshares in Columbus, Ohio, is getting ready to launch an on-line brokerage in the coming weeks.

The bank views the service as just another way to build relationships with its customers, rather than as a means of taking on the heavyweights, said Robert Comfort, senior managing director in the brokerage division.

"Our focus has not been to go and seek out the traders," Mr. Comfort said.

"In our opinion it complements customers that have relationships with a broker," he said.

In general, banks have not been able to compete with the low prices or hefty advertising budgets of the on-line market leaders.

"We don't have $100 million to throw into marketing," said Mr. Kreul, referring to the hefty sum earmarked for advertising by E-Trade. E-Trade charges $14.95 a trade, compared to Comerica's minimum of $25. Huntington will charge a minimum of $23.95.

But there are ways for banks to stand out, and they do not necessarily have to buy a discount firm, as Fleet Financial Group did with Quick & Reilly in 1998.

"Banks need to make their Internet brokerages more compelling," said Christopher Musto, senior analyst with Gomez Advisors Inc., Concord, Mass.

One way to achieve that is to provide a seamless link between bank and brokerage accounts, Mr. Musto said.

Comerica, Huntington, and several other banking companies are working on that issue.

Comerica customers can currently move funds between the bank and brokerage during business hours, Mr. Kruel said. The bank is working on making that a 24-hour capability, he said.

Huntington plans on offering the ability to transfer funds between accounts when its on-line brokerage goes live, Mr. Comfort said.

"It's going to be difficult for banks to compete with E-Trade," Mr. Comfort said. "It's not realistic for us."